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November 12, 2008

Citigroup Reaches Out to Troubled Homeowners Facing Foreclosure

Category: Uncategorized – admin – 8:07 am

Citigroup Inc. announced Tuesday that it will preemptively contact 500,000 mortgage holders to restructure their mortgage terms on as much as $20 billion in home loans for borrowers who are current on their home loan payments but in danger of falling behind. Under its new program, the Citi Homeowner Assistance Program, Citi is focusing on borrowers who live in areas that are likely to face “extreme economic distress.”

 

“Under our new program we will preemptively reach out to help homeowners before they become delinquent, which is critical to avoiding the loss of a home and protecting their credit score and future borrowing potential,” said Sanjiv Das, chief executive officer of CitiMortgage.

 

Citi extended its moratorium on foreclosures, saying it won’t begin or complete a foreclosure sale on a home on which it owns the home mortgage if the borrower wants to stay in the home, which is his or her principal residence. And, Citi said it is also working with investors to expand the Citi Homeowner Assistance program to include mortgages Citi services but does not own.

 

It added that it recently streamlined its loan modification program to rework delinquent loans. This revamped program uses a simplified formula to figure out an affordable payment as a percentage of the borrower’s gross income. It then reduces the monthly payment to that amount by either reducing interest rates on the loan, extending the loan’s term or forgiveness of principal.  You do not have to work with foreclosure lawyers if you would rather deal with a foreclosure prevention company or the lender directly.

 

“We believe at-risk borrowers should not have to wait until they are facing potential foreclosure before they become eligible for a loan modification or a foreclosure pause,” said Eric Eve, senior vice president at Citi.  Since 2007, they have helped nearly 370,000 families, representing more than $35 billion in underlying loans, avoid foreclosure. Even if you’ve been turned down previously, call CitiMortgage. You may qualify under its newly announced program.

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October 20, 2008

Home Prices Decline with Mortgage Woes

Category: Editorial,Home Loan News,Uncategorized – admin – 8:00 am

Home prices across much of the country are likely to fall through late 2009, economists say, and in some markets the trend could last even longer depending on the severity of the anticipated recession. More and more homes are going up for sale, but fewer and fewer people are willing or able to buy them.  Borrowers are having great difficulty qualify for conventional mortgages and FHA house loans.

Escalating mortgage rates are pricing out interested buyers.
On Wednesday, the average rate for 30-year fixed rate mortgage loans was 6.75 percent, up from 6.06 percent last week. While banks are moving aggressively to sell foreclosed properties, the number of empty homes is hovering near its highest level in more than half a century. Higher interest rates result in bigger monthly payments, pricing some potential buyers out of the market.

While the national average rate for a 30-year fixed-rate mortgage is now 6.75 percent, according to HSH Associates, mortgage brokers say the mortgage rates for many borrowers in the Southwest or Florida can be as high as 8 percent, especially for so-called jumbo loans that are too big to be sold to Fannie Mae and Freddie Mac. (Those loan limits vary by area from $417,000 to roughly $650,000.)

Job loss and declining incomes contribute to declining housing values.
At the same time, the number of people who are losing jobs or seeing their incomes decline is rising. The unemployment rate has climbed to 6.1 percent, from 4.4 percent at the end of 2007, and wages for those who still have a job have barely kept up with inflation.

“The No. 1 thing that drives housing values is incomes,” said Todd Sinai, an associate professor of real estate at the Wharton School at the University of Pennsylvania. “When incomes fall, demand for housing falls.”  The current housing downturn is much more national in scope and severe than any other in the postwar period, partly because of the proliferation of risky mortgage lending practices. Today, foreclosures are running ahead of the downturn in the economy, a reversal of previous housing slumps.

“We are in uncharted waters,” said Brian A. Bethune, an economist at Global Insight, a research firm.

Mortgage financing and increasing Fannie Mae and Freddie Mac fees discourage would-be buyers.

More and more interested buyers are having to give up on homes they’ve been trying to buy even after they secure pre-approval from lenders because the mortgage lenders are changing their minds. On top of that, Fannie Mae and Freddie Mac, the government sponsored entities (GSEs) that the government took over in September, have increased fees on mortgage loans made to borrowers who have good but not excellent credit scores, even those who are making down payments as big as 30%.

This month, Fannie and Freddie canceled a fee increase that would have applied to markets where home prices are falling, but the companies still have many other fees in place.

Is there an end in sight?
Mark Zandi, chief economist at Moody’s Economy.com, said that he believed that home prices, which have already fallen by 20 percent, will fall by another 10 percent and will not stabilize until the middle of next year.

Last Tuesday, the Treasury Department announced it would inject up to $250 billion in U.S. banks in return for partial ownership stakes, in a program similar to one launched in 1932 by President Herbert Hoover. The government hopes banks will use the capital infusions to rebuild their reserves and bolster lending to customers. Hopefully, this injection of capital will help turn the housing market around.

Good News on the Money Markets
Yahoo News reported that world stocks increased Monday ahead of expected gains on Wall Street. It appears that confidence is returning to money markets. The global credit markets are thawing, as well. Interbank lending rates are dropping as a result of the flurry of government efforts to put money into banks over the past couple of weeks and interest rate reductions. The interbank lending rate for the three-month dollar loans fell for the sixth day running Monday and by its biggest daily amount since January. It dropped 0.36% to 4.06%, while the three-month Euro Interbank offered rate (Euribor) fell almost 0.05% to 5.00%.

“It’s crucial for the stability of financial system that money market rates, effectively the lifeblood for markets, are coming down,” said Neil Mackinnon, chief economist at ECU Group.  “We’ve moved away from outright meltdown on the back of measures taken by governments and central banks and there is some semblance of stability returning to the markets,” he added.  It will take a while for all the government assistance to settle in, but there are signs that the recent infusions into the financial markets are helping.

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May 29, 2008

FHA Loans – Good Mortgage For First Time Home Buyers by Dale Stouffer

Category: Uncategorized – admin – 12:03 pm

Federal Housing Administration, FHA mortgage loans are perfect for First Time Home Buyers. FHA and the loans it offers were created to help increase the number of Americans who own their home.  One of the great benefits of a FHA loan is that they are very flexible in their approval criteria which allows for an easier qualification process than other Fannie Mae and Freddie Mac loan programs.  Remember this rule of thumb: if you are employed and have kept good credit history for the past twelve months prior to when you want to get the loan then you have a good shot at qualifying for an FHA home loan.  There are many benefits of purchasing a home using a FHA mortgage:

Low Down Payment and Closing Costs – One barrier for many people to buying a home is having enough money for closing costs and the down payment. FHA allows for less money to come out of your pocket.

* Less than 3% of Sales Price is required for down payment

* There are some 100% financing options

* You can get a gift from a family member for all of your down payment and closing costs

FHA lenders understand that consumers have things that come up and it believes that a bump in the credit road should not prevent you from owning a home. Here are some of the flexible guidelines from FHA about your credit.  Read more of the article at Loan Article for First Time Home-Buyers.

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May 28, 2008

VA Home Loans Prove Safest Play For Home Owners By Brian Quigley

Category: Uncategorized – admin – 10:14 am

VA home loans have proven to be a safe play for homeowners over the years.  The recent increase for VA loan limits have helped many homeowners attain the full 100% financing in areas that were not once available to the full $417,000. As a mortgage broker, it is important that you ask your clients if they were ever in the military, because having that benefit can and will save them more money a month, with less of a down payment then going conventional through fannie mae or freddie mac, and even better then FHA.  Continue reading the full article at http://ezinearticles.com/?VA-Home-Loans-Prove-Safest-Play-For-Home-Owners&id=1145127

 

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May 12, 2008

150,000 Homeowners Benefit with New Fannie Mae Program

Category: Uncategorized – admin – 10:39 am

Being underwater in the existing market means owning more on a mortgage than the underlying security – that would be the home is worth. Some borrowers actually took out a loan that was near 100% home loan to value, others have watched their equity disappear as housing prices plummeted. Were the borrower to sell the house or refinance under today’s economic conditions he would have to bring cash to the closing table to make up the difference between the loan or sale proceeds and what is actually needed to retire the old debt.

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May 10, 2008

LendingTree Employee Involved in Lead Selling Scandal

Category: Uncategorized – admin – 5:23 pm

It is expected to be announced today that a former LendingTree employee was caught in a elaborate lead selling scheme. This has not yet been verified by LendingTree, but was brought to my attention by a number strong and reliable sources. An ex-lendingtree employee, possibly partnered with a current LendingTree employee, accessed LendingTree’s database of live consumer data and sold the data to a mortgage companies.

Apparently, because social security numbers were included in the stolen data the FBI has been very closely involved. This is a major breach of security for the trusted lead generator.

How many times did this ex-employee sell the data? How many current employees were involved on the inside? How many mortgage companies knowingly or unknowingly bought this data? These are all unknown questions but hopefully be answered today.  – From the Mortgage Wire

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May 9, 2008

VA Home Loan Underwriting

Category: Uncategorized – admin – 9:48 am

VA Underwriting Standards

VA home loans involve a veteran’s benefit. Therefore, lenders are encouraged to make VA loans to all qualified veterans who apply.

VA’s underwriting standards are intended to provide guidelines for lenders’ underwriters as well as VA’s mortgage underwriters. Underwriting decisions must be based on sound application of the underwriting standards, and underwriters are expected to use good judgment and flexibility in applying the guidelines set forth in the following pages.

Basic Requirements

By law, VA may only guarantee a home loan when it is possible to determine that the veteran:

· Borrower must be satisfactory credit risk, and

· has present and anticipated income that bare a proper relation to the contemplated terms of repayment.

It provides guidance on how to treat income, debts and obligations, credit history, and so on, and how to present and analyze these items on the VA home loan analysis form. It does not deal with every possible circumstance that will arise; therefore, underwriters must apply reasonable judgment and flexibility in administering this important veteran’s benefit.

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May 8, 2008

Mortgage Brokers Loose Market Share

Category: Uncategorized – admin – 10:56 am

What a difference a declining housing market can make.  According to Wholesale Access, just a few years ago, mortgage brokers originated more than two-thirds of new home loans. Now their share of the mortgage market has been cut to 45%.

That’s a shocking loss of market share when you consider that home loan brokers were supposedly a better for homeowners. Because they don’t work for any one bank, they can shop dozens of lenders on your behalf to get the best loan at the lowest price.

But they seldom did. Instead, brokers pocketed kickbacks from banks in return for selling borrowers unnecessarily costly loans. An April study by the Center for Responsible Lending, a nonprofit organization working to eliminate abusive lending practices, found that among borrowers with credit scores of 640 or less, those who used brokers paid an average of $5,222 more in the first four years of their mortgage than those who borrowed directly from a bank. Borrowers with credit scores of 640 to 720 paid $1,316 more.

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30-year Home Mortgage Rates See Minor Reduction

Category: Uncategorized – admin – 10:39 am

Freddie Mac reported that U.S. 30-year mortgage rates eased slightly in the week ended May 8. Thirty-year mortgage rates dropped to an average of 6.05 percent from 6.06 percent last week, as 15-year mortgages rose to an average of 5.60 percent from 5.59 percent the prior week, Freddie Mac said.  One-year adjustable rate mortgages, or ARMs, were unchanged at an average of 5.29 percent.

 

Freddie Mac said the “5/1″ ARM, set at a fixed rate for five years and adjustable each following year, averaged 5.67 percent, down from 5.73 percent a week earlier.  A year ago, 30-year mortgage rates averaged 6.15 percent, 15-year mortgages 5.87 percent and the one-year ARM 5.48 percent. The 5/1 ARM averaged 5.89 percent. “Despite a weak housing market, mortgage rates remained almost unchanged this week based on better-than-expected economic data releases that indicated the economy still has some staying power,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

 

Home loan lenders charged an average of 0.3 percent in fees and points on 30- and 15-year mortgages, both down from 0.5 percent last week. The home mortgage rates charged 0.5 percent on the 5/1 ARM, unchanged from a week earlier.Fees and points charged on the one-year ARM averaged 0.6 percent, also unchanged from a week earlier.

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May 5, 2008

Home Equity Loan Advertising Down Significantly in 2007

Category: Uncategorized – admin – 3:44 pm

Research conducted by Mintel Comperemedia here finds that direct mail campaigns conducted by lenders looking for home equity loan customers fell by 21% in 2007 compared with 2006.  Taken as a whole, marketing mailings for mortgage and home equity products declined by 30% during the period, with mortgage mailings down by 34%.

There were just 930,000 home equity product marketing mailings in 2007, compared with 1.2 billion the year before.  Mintel found that eight of the top 10 home equity and mortgage direct mail marketers had reduced their total offers sent in 2007. Of those that cut back, half had reduced their direct mail campaigns by over 60% from 2006.  “As the housing bubble continues to deflate, we can expect companies to constantly readjust,” said Farah Huq, market research manager at Mintel Comperemedia. “I wouldn’t expect to see dramatic increases in direct mail until the market has stabilized and consumers seem ready. Instead, I think we’ll see internal shifts in the top mailers and the types of offers advertised through direct mail.”

Meanwhile, one bank executive is telling consumers that now is the time to evaluate their home equity loan accounts at several banks and see if they can be improved and/or maximized.  Brad Smith, executive vice president of customer service at UMB Bank, Kansas City, Mo., said, “Homeowners need to compare offers, rates and professional counsel they receive. Even if no changes are made, they will at least have a more secure outlook and understanding regarding their current plans. On the other hand, homeowners may discover a better product and rate for their situation and a more personable level of service relevant to their needs. It’s easy to switch this service and often there’s no cost involved to do so.  “Homeowners should also look into a HELOC that has, at a minimum, a two-year lock on interest rates. A rate lock allows homeowners to better manage monthly cash flow and provides a level of comfort in a changing rate environment.  “People constantly review investments in their 401k and that same practice should be done with one of their biggest investments – the home. Now is a perfect time for homeowners to proactively assess the services used to manage the equity of their homes and talk to different lending institutions to ensure they have the best programs for their individual needs. Very often, a little invested time can result in positive results by saving hundreds or thousands of dollars and, of course, providing better peace of mind,” he said.  – Article written by Brad Finkelstein

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FHA Secure Check Helps Determine Refinance Eligibility

Category: Uncategorized – admin – 3:40 pm

There are as many as 7.5 million sub-prime home mortgages outstanding and more than 2 million of them are estimated to be at risk for foreclosure as interest rates adjust upwards. Foreclosure rates set records in 2007 and touched off a credit crisis in the secondary market for mortgages that the real estate finance industry continues to cope with. The prospect of a continuing increase in foreclosure rates prompted the Federal Housing Administration to create the FHA Secure loan program last September. The FHA Secure refinance program allows homeowners to refinance their current mortgages into FHA mortgages if they have missed loan payments. The program applies only to borrowers who have missed payments because of a spike in adjustable-rate mortgage interest rates that caused their total payments to spike. Bills.com, a one-stop portal for financial information that is a division of Freedom Financial Network LLC, has launched a new program to help homeowners determine if they are likely candidates for the government’s program, called FHA Secure Check.

According to Andrew Housser, co-CEO of Bills.com, determining eligibility for the refinance program can be challenging given the extensive criteria set by the FHA.

“But with Bills.com’s FHA Secure Check program, homeowners can complete a simple form and receive an immediate assessment of their likely eligibility, along with refinancing quotes from mortgage lenders, banks, and brokers in Bills.com’s lender network,” he said, noting that the program is just one part of Bills.com’s personal finance education and information platform.

He added that FHA Secure Check “can help homeowners navigate the government program’s criteria and evaluate whether they can refinance under the new guidelines.” Home loan lenders and mortgage brokers who are Bills.com partners can receive eligible matches from the FHA Secure Check program. Bills.com’s lender network comprises more than 100 mortgage lenders, banks, and brokers. Also available to lenders and brokers are a blog about consumer finance issues, a comprehensive budget guide, and a full series of news releases containing more than 400 tips to help consumers manage personal finance issues. – Article written by Alton Gary Simpson

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New Legislation for Mortgage Lenders

Category: Uncategorized – admin – 11:26 am
Activists knocked on doors at the State House for the better part of a decade, urging lawmakers to require that national mortgage lenders do their part to help make housing more affordable in this state.

Despite their efforts, it took a complete mortgage market meltdown for the reform to finally get passed.  The measure, which was approved by the Legislature last fall, would require most mortgage lenders that aren’t traditional banks to adhere to community reinvestment requirements that resemble those that the banks have followed for years.

The Division of Banks is currently drawing up rules to implement the new law that would create a way to grade lenders on their efforts to help those of low and moderate incomes buy and stay in their homes. David Cotney, the agency’s chief operating officer, says he hopes the draft will be done by the end of the month, and that the new rules could take effect by sometime in the fall.

Well, it’s better late than never. But this type of reform could have made a big difference in curbing some of the excesses of national subprime lenders such as Ameriquest and Countrywide during the recent real estate boom. Now, many of the lenders that caused the subprime mess have disappeared. Ameriquest stopped issuing loans last year, and Countrywide is about to be swallowed by Bank of America at a bargain-basement price.

They’re not alone: For the first time since the Division of Banks started licensing mortgage lenders in 1992, the agency is seeing a drop in the number of licensees. The agency reported 493 licensed mortgage lenders (excluding traditional banks) a year ago. That number has dropped to about 450.

One likely reason for the decline: Rising foreclosure rates across the country have soured investors’ appetite for the junky loans that the subprime lenders used to sell.  Housing advocates feared this flood of foreclosures more than seven years ago when they started pushing for the bill that would expand community reinvestment rules to mortgage lenders. The steady appreciation of home values at the time masked the depth of the problem, but activists were already troubled by incidents in which people with modest means were put in loans they could not afford.

The bill almost made it to the finish line in July 2002 when the Senate passed it in the face of stiff opposition from the mortgage industry. But the time ran out before the House could vote on the legislation.  The measure gained a high-profile backer in Gov. Deval Patrick – perhaps looking to further distance himself from his tenure on the board that oversaw Ameriquest – once he became governor last year. The Division of Banks had avoided taking a stance on the issue under previous governors. But the agency, under Patrick’s guidance, actively championed the reform.  The legislation eventually showed up in a wide-ranging bill that the Legislature passed last fall aimed at stemming the state’s rising tide of foreclosures.

Many elements of that bill – including a measure that took effect on Thursday, allowing a 90-day grace period before lenders can pursue a foreclosure – would certainly have been helpful a few years ago before foreclosures became a serious problem here. But few of the measures have been kicking around as long as the reinvestment requirement for mortgage lenders.  Housing activists say they’re still happy this finally got passed, even if many of the bad actors have already left the stage.

Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, says the reforms will likely lead to more loan options for many consumers, particularly first-time home-buyers. He says it’s useful to have the new requirement in place so lenders will get additional scrutiny when the housing market in the state finally picks up again.

The Division of Banks plans to grade mortgage lenders on their efforts, and take that grade into consideration during the firms’ annual license renewals.  Callahan says Massachusetts is only one of three states where regulators grade banks on their community-oriented investments, although national regulators also evaluate banks based on the federal Community Reinvestment Act. He says this is the only state that has such a provision for credit unions, and now it’s the only one for mortgage lenders.

While an argument can be made that the mortgage companies should be treated somewhat differently because they don’t accept deposits here, there’s no reason they shouldn’t invest in the health of the local economy, too. It’s just too bad that it took a financial disaster for the politicians on Beacon Hill to finally pay attention.

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